insurance, PNC Bank Corp. is trying to take human beings out of the equation. Two years ago, the bank began pitching accidental death and dismemberment insurance - a bank staple - through the mail. PNC officials would not quantify the success of the direct marketing program to date. But the results have been compelling enough to lead bank officials to consider broadening its menu of insurance offerings by the end of 1996 to include whole and term life, and property and casualty. "We see insurance as another financial service that helps enhance the customer relationship," said Jonathan H. Randall, PNC's assistant vice president for life, health, and annuities products. To be sure, PNC has no objection in using humans to sell insurance. Currently, the Pittsburgh-based bank uses brokers - its own and those supplied by an outside firm - to sell a single premium universal life product. But unlike a slew of other banks, PNC has decided not to build its insurance business through branch distribution. "We've made the decision that's not the way we are going to grow the business," Mr. Randall said. "It's not the recipe for success." He added, "The reality is that the overwhelming majority of a banks' customers do not come into branches." By contrast, Mr. Randall sees direct mail as a less costly and more efficient way to build this business."It's not as expensive as paying for a body in the field," he said. As a result, PNC, with $62.8 billion in assets, is using the marketing of accidental death and dismembership products as a springboard to upcoming mailings directed at the traditional life insurance market. The bank has contracted with two different third-party marketing firms - Coverdell & Co., Atlanta, and Fisi-Madison Financial, Nashville - to help with the effort. PNC is targeting people between 18 and 49 years old with less than $75,000 in annual household income. This demographic group has been largely abandoned by traditional life agents in search of more lucrative contracts. "Either no one has approached these customers or they may not be able to qualify for traditional life insurance," Mr. Randall said. Mr. Randall said he considers accidental death and dismemberment insurance well suited for its initial direct marketing effort. "You have a guaranteed issue: When someone applies for it, they get it," he said. Third-party marketing firms such as Coverdell help a bank with everything from marketing research to production of materials. In some cases, they do it all. For example, Fisi-Madison provides a turnkey marketing program for the accidental death and dismemberment policies the bank sells, providing everything from postage and printing to a customer hotline. These are activities most banks don't want to take on themselves. Coverdell & Co., does rigorous quantitative analysis of PNC Bank's existing customer data in an effort to predict how receptive customers will be to products pitched in the mail. Banks compile information from customer files on types of accounts, durations of accounts, average balances of accounts, ages of account holders, zip codes, and customers' income levels. With that information, the bank targets specific customers for direct mailings. Direct-marketing materials could also be pegged to events like birthdays, marriages, and changes in address. "It's unlikely that they've staffed that internally, but we're able to provide that because we have it for many banks," said Coverdell president Michael D. Levison. "We're spreading the cost of that and it allows us to maintain an internal level of expertise that would be impossible in one bank," he said. PNC's direct marketing effort is fairly straight-forward. The customer receives a letter from a PNC bank officer that introduces the product and the insurance carrier. Enclosed with the letter is detailed product description and information on how to contact the insurance company - typically a phone number and a response card are supplied. After the kinks are worked out, Mr. Randall says, term life, property and casualty, and some hospital supplementary insurance will be folded into the bank's direct-marketing sales efforts. Mr. Randall draws a parallel between his bank's nascent insurance business and banks' initial foray into the mutual fund business. Yet PNC acknowledges that before an all-out effort is made with traditional insurance products, some issues must be addressed. For example, Mr. Randall said, "some customers may get turned down and the bank will have to deal with an upset customer." In a survey of the top 100 U.S. banks, Coverdell found that 85% of the 75 respondents plan to use direct marketing for life insurance sales. Only 50% plan to use agents and 50% plan to use platform personnel as well. While PNC hopes to eventually sell life insurance through the mail, past evidence suggests that a big challenge lies ahead. A scant 2% of premiums written on life insurance are derived from responses to direct marketing or advertising, according to Limra International, a Hartford, Conn.-based trade association - formerly the Life Insurance Marketing and Research Association - that studies the industry. The remainder of policies are sold via direct contact by agents. "Would you buy life insurance because you got a letter in the mail? With a bank it might be a little different because people tend to trust banks - that's just so new it's hard to tell," a Limra spokesman said. Mr. Randall says the bank is confident direct mail with prove profitable in spite of skepticism. "We hope there won't be that reticence. It's all contingent upon saying the right thing to the right customer at the right time," he said.

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